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Rising Wages: Has China Lost Its Global Labor Advantage?

  • Dennis Tao Yang

    (Chinese University of Hong Kong/ The Conference Board)

  • Vivian Chen

    (The Conference Board)

  • Ryan Monarch

    (University of Michigan)

We document dramatic rising wages in China for the period 1978–2007 based on multiple sources of aggregate statistics. Although real wages increased seven-fold during the period, growth was uneven across ownership types, industries and regions. In the last decade, the wages of state-owned enterprises increased rapidly and wage disparities between skill-intensive and labour-intensive industries widened. Comparisons of international data show that China’s manufacturing wage has already converged to that of Asian emerging markets, but China still enjoys enormous labour cost advantages over its neighbouring developed economies. Our analysis suggests that China’s wage growth will stabilize to a moderate pace in the near future.

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File URL: http://www.conference-board.org/economics/workingpapers.cfm?pdf=E-0043-09-WP
File Function: First version, 2009
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Paper provided by The Conference Board, Economics Program in its series Economics Program Working Papers with number 09-03.

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Length: 38
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:cnf:wpaper:0903
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  1. Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June.
  2. John Knight & Lina Song, 2003. "Increasing urban wage inequality in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(4), pages 597-619, December.
  3. Haiyan Deng & Robert H. McGuckin & John C. Haltiwanger & Xu Jianyi & Liu Yaodong & Liu Yuqi, 2007. "The Contribution of Restructuring and Reallocation to China's Productivity and Growth," Economics Program Working Papers 07-04, The Conference Board, Economics Program.
  4. Ravi Kanbur & Xiaobo Zhang, 2004. "Fifty Years of Regional Inequality in China: A Journey Through Central Planning, Reform and Openness," Working Papers 158, Institute for Social and Economic Change, Bangalore.
  5. Yang, Dennis Tao, 2005. "Determinants of schooling returns during transition: Evidence from Chinese cities," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 244-264, June.
  6. Wan, Guanghua & Lu, Ming & Chen, Zhao, 2006. "Globalization and Regional Income Inequality: Empirical evidence from within China," Working Paper Series RP2006/139, World Institute for Development Economic Research (UNU-WIDER).
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  8. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
  9. Dong, Xiao-Yuan & Putterman, Louis, 2003. "Soft budget constraints, social burdens, and labor redundancy in China's state industry," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 110-133, March.
  10. Zhang, Junsen & Zhao, Yaohui & Park, Albert & Song, Xiaoqing, 2005. "Economic returns to schooling in urban China, 1988 to 2001," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 730-752, December.
  11. repec:cup:cbooks:9780521771269 is not listed on IDEAS
  12. Richard B. Freeman & Remco Oostendorp, 2000. "Wages Around the World: Pay Across Occupations and Countries," NBER Working Papers 8058, National Bureau of Economic Research, Inc.
  13. Giles, John & Park, Albert & Zhang, Juwei, 2005. "What is China's true unemployment rate?," China Economic Review, Elsevier, vol. 16(2), pages 149-170.
  14. Yang, Dennis Tao, 2002. "What has caused regional inequality in China?," China Economic Review, Elsevier, vol. 13(4), pages 331-334, December.
  15. John Giles & Albert Park & Fang Cai, 2003. "How has Economic Restructuring Affected China’s Urban Workers?," William Davidson Institute Working Papers Series 2003-628, William Davidson Institute at the University of Michigan.
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